ISLAMABAD: The Senate Special Committee on Tobacco Taxation has directed the Federal Board of Revenue (FBR) to submit a report about the relatives of tax officials working in cigarette companies.

On Tuesday, the Senate Special Committee on Tobacco Taxation met at the Parliament House under the chairmanship of Senator Kalsoom Perveen.

The committee asked the FBR to give reasons for decrease in tax collection from the tobacco sector. Senator Dilawar Khan said the government must take steps to check inflow of non-duty paid cigarettes from Azad Jammu and Kashmir (AJK).

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PTI Senator Azam Swati said the tax evasion is taking place in the cigarette sector. He said the issue of tobacco sector was also discussed during the cabinet meeting where Prime Minister Imran Khan had directed to investigate the matter, Swati added.

PPP Senator Sherry Rehman said the tobacco lobbies are active and “we do not want to become part of any lobby”. The committee should investigate whether there is a conflict of interest in the FBR while dealing with the tobacco sector, she added. The FBR should recover tax evasion of Rs60 billion from the sector by June 30, 2018.

Tax authorities informed the special committee that non-duty paid cigarettes are being manufactured in AJK and tribal areas and steps are being taken to control manufacturing and movement of such smuggled and non-duty paid cigarettes in tariff areas.

The tax measures on cigarette industry would result in increased revenue to the tune of Rs120 billion by the end of current fiscal year, FBR officials said.

The FBR officials said that the results of third slab on cigarettes and enforcement measures are now visible from data and trend of increase in revenue collection from the tobacco sector.

The FBR officials revealed that the third tier of excise duty on cigarettes resulted in growth of 19.50% in revenue during 2017-18 against the same period of last fiscal year. The introduction of the third tier of tobacco has helped the government regain its lost revenue, which has increased to Rs88.5 billion during 2017-18 as compared to Rs74.1 billion during 2016-17, registering a growth of 19.5%.

The massive decline in revenues from tobacco sector was witnessed during 2016-17 when federal excise duty was levied on two tier basis only.